Royal Caribbean Cruises, the parent company of Royal Caribbean International, Celebrity Cruises and Silversea, may need to lay off more staff as it looks to raise an additional US $1-billion in cash, despite positive booking trend for 2021.
The world’s second-largest cruise line said that it would have to implement additional job cuts if a prolonged non-revenue scenario continues, while the US $1-billion raised through a common stock offering would be put toward general corporate expenses.
While there is growing optimism that the US cruise industry might soon return to service, Royal Caribbean said in an SEC filing this week that it would be forced to take additional measures to conserve cash flow if the shutdown continues into next year.
These measures would include considerations such as the cold layup of more ships as well as “further assessment of our US shoreside workforce, including those coming back from furlough.”
This despite a slight improvement in forward bookings for cruises in 2021, according to the same SEC filing, in which the cruise line said bookings for 2021 have continued to improve over the last two months, although still below pre-COVID-19 levels.
“Pricing for 2021 bookings is relatively flat year-over-year when including the negative yield impact of bookings made with future cruise credits; it is slightly up year-over-year when excluding them,” the cruise line said.
Royal Caribbean Cruises currently has liquidity of approximately US $3.7-billion, with $3-billion in the form of cash and cash equivalents and a $700 million commitment for a 364-day loan.
“Our cash burn rate for the third quarter was consistent with our previously announced range of approximately $250 million to $290 million per month during a prolonged suspension of operations,” it said.
This figure excludes cash refunds of customer deposits, commissions, cash inflows from new and existing bookings and fees and collateral postings related to financing and hedging activities.
“In response to the financial impacts of COVID-19, we have taken preemptive actions that focus on strengthening liquidity through significant cost and capital expenditure reductions, cash conservation and additional financing sources,” the cruise line said.
These preemptive actions include significant reductions in fleet operating expenses, such as transitioning ships into cold lay-up and reducing payroll expenses, including food, insurance and port charges.
In addition most marketing activities for 2020 have been eliminated, while 23% of its US shoreside staff have been furloughed and a company-wide hiring freeze has been introduced.